COMPLIANCE WITH SYSC REQUIREMENTS

Transcription

1 COMPLIANCE WITH SYSC REQUIREMENTS Background This document has been prepared further to Rule 4.3A.11R of the Senior Management Arrangements, Systems and Controls (SYSC) Chapter of the FCA Handbook. This Rule requires a firm subject to the Capital Requirements Regulation and with a website to explain how it meets the requirements set out in SYSC Rules 4.3A.1R to 4.3A.3R and 4.3A.4R to 4.3A.11R. These Rules set out certain governance arrangements for firms subject to the Capital Requirements Regulation. The information contained in this document is correct as at 1 February Ownership Sumitomo Mitsui Banking Corporation Europe Limited (the Bank) is a wholly-owned subsidiary of Sumitomo Mitsui Banking Corporation (SMBC), which is a bank incorporated in Japan. SMBC is a wholly-owned subsidiary of Sumitomo Mitsui Financial Group (SMFG), which is a financial services holding company incorporated in Japan. Governance The Bank s Board of Directors has put in place a governance structure that it believes is appropriate for a regulated bank that is a wholly-owned subsidiary. The following sets out key elements of the Board s governance arrangements. Board of Directors The Board is responsible for the leadership, direction and control of the Bank and for ensuring that the Bank complies with its legal and regulatory requirements. The Board s responsibilities include approving and overseeing implementation of the Bank s strategic objectives, risk strategy and internal governance, ensuring the integrity of the Bank s accounting and financial reporting systems and for defining and overseeing the implementation of governance arrangements that ensure that the Bank is managed in an effective and prudent manner. Page 1 of 8

2 The Board comprises eight Directors, four of whom are executive and four of whom are non-executive. The Directors are as follows: Independent non-executive Ms Laurel Powers-Freeling (Chairman) Mr Alan Keir Mr Derek Ross Group non-executive Mr Kenichi Hosomi Executive Mr Tetsuro Imaeda (Chief Executive Officer) Mr Keiichiro Nakamura Mr Stanislas Roger Mr Takayuki Inoue Independent non-executive Directors The Board has appointed four non-executive Directors. - Ms Powers-Freeling is the Chairman of the Board, the EMEA Nomination Committee and the Remuneration and Human Resources Committee. She is also acting Chairman of the Audit, Risk and Compliance Committee. She was appointed a Director of the Bank on 1 July Ms Powers-Freeling is a director of four other companies: Atom Bank Plc (financial services), C. Hoare & Co. (financial services), Callcredit Information Group (financial services) and Majid Al Futtaim Ventures (leisure, entertainment and business ventures). - Mr Ross was appointed a Director of the Bank on 23 September Mr Ross is a director of two other companies: Depository Trust and Clearing Corporation, and a number of its subsidiary companies (clearing and settlement services) and GE Capital Bank Limited (financial services). Page 2 of 8

3 - Mr Keir was appointed a Director of the Bank on 12 October Mr Keir is a director of three other companies: HSBC Trinkaus und Burkhadt (financial services), HSBC Bank Middle East (financial services) and Majid Al Futtaim (retail, hotels and leisure). Group non-executive Director - Mr Hosomi is an Executive Officer and Managing Director of SMBC. He is General Manager of SMBC s Planning Department, International Banking Unit. He was appointed an executive Director of the Bank on 13 April 2012 and on 23 June 2015 became a non-executive. Mr Hosomi is a director of one other SMBC group company. Executive Directors The executive Directors, under the leadership of the CEO, Mr Imaeda, are responsible for running the business of the Bank, implementing the strategy and policies approved by the Board and for ensuring the Board s decisions are implemented appropriately. They also have executive responsibility for certain areas of the Bank s business. Further detail on the executive Directors is shown below. - Mr Tetsuro Imaeda, appointed as a Director on 27 September 2016, is the Chief Executive Officer. Mr Imaeda is also an Executive Officer and Managing Director of SMBC. In addition to his Directorship of the Bank, Mr Imaeda is a Director of three other SMBC group companies. - Mr Keiichiro Nakamura, appointed as a Director on 2 April 2012, is the Chief Operating Officer and General Manager of Planning Department, which has responsibility for the following activities: corporate planning, human resources, financial reporting and information systems. In addition to his Directorship of the Bank, Mr Nakamura is a Director of two other SMBC group companies. - Mr Stanislas Roger, appointed as a Director on 29 April 2015, is the Deputy Chief Executive Officer. He is the General Manager of Global Aviation and Maritime Finance Department. Mr Roger is also an Executive Officer and Director of SMBC. - Mr Takayuki Inoue, appointed as a Director on 16 May 2014, is the General Manager of Credit Department, which has responsibility for the Bank s credit sanctioning activities. Mr Inoue has no other directorships. Page 3 of 8

4 The Board meets quarterly and additionally, when necessary. Between these meetings there is regular contact between the executive and non-executive Directors. The Board has a formal schedule of matters reserved for its consideration. All Directors, the Board and the Board Committees have access to the advice of the Company Secretary and have the right to seek independent professional advice at the Bank s expense in the furtherance of their duties. The Directors conduct a periodic review of the effectiveness and performance of the Board and the Audit, Risk and Compliance Committee. The results of these reviews are reported as appropriate to the Board and Audit, Risk and Compliance Committee and proposals are made to implement any changes required. Board Committees The Board has delegated specific areas of responsibility to the Board Committees, each of which has terms of reference that are reviewed at least annually. The Committees are as follows: Audit, Risk and Compliance Committee The members of the Audit, Risk and Compliance Committee are the non-executive Directors. Ms Powers-Freeling is the acting Chairman of this Committee. At the invitation of the Committee Chairman, Mr Imaeda and Mr Nakamura also attend Committee meetings. The relevant members of executive management are also invited to attend Committee meetings, including: the Co-General Managers of Audit Department, the Co-Chief Risk Officers, the Chief Compliance Officer, the Co- General Manager of Planning Department Legal and Compliance Department (who is also appointed Money Laundering Reporting Officer) and the Head of Planning Department - Finance and Control Group. A representative of the external auditors is also required to attend a minimum of two meetings per annum. The Co-General Manager of Planning Department Legal and Compliance Department and General Counsel EMEA, who is also appointed Money Laundering Reporting Officer, the Co- General Managers of Audit Department and the Co-Chief Risk Officers have direct access at any time to the Committee members. The Audit, Risk and Compliance Committee is principally responsible for considering the Bank s risk management structure and systems, the main areas of risk faced by the Bank, conduct risk and regulatory issues, annual financial statements, external audit arrangements, Internal Audit and Credit Review oversight, monitoring the Bank s risk management and internal control systems and the appointment and dismissal of the Co-General Managers of Audit Department. The Committee is also responsible for considering whistle blowing reports and for assessing the effectiveness of the Bank s whistle blowing arrangements. The Committee also receives a report on the major Page 4 of 8

5 areas of discussion at Risk Committee meetings. The Audit, Risk and Compliance Committee meets quarterly and reports to the Board of Directors. Executive Committee Mr Imaeda is the Chairman of this Committee, which is attended by all executive Directors and the other General Managers and Co-General Managers of the Bank. The Co-General Managers of Audit Department attend Committee meetings as nonmembers. The Executive Committee is responsible for the supervision and management of the Bank s daily operations and for overseeing the work of the Risk Committees. The Executive Committee meets monthly and reports to the Board of Directors. The Bank s non-executive Directors receive a copy of the agenda, papers and minutes of all Executive Committee meetings. EMEA Nomination Committee The members of the EMEA Nomination Committee are Ms Powers-Freeling (Chairman), Mr Ross, Mr Imaeda, Mr Nakamura and Mr Roger. The EMEA Nomination Committee is responsible for assessing and recommending candidates to the Board to fill Board, Senior Manager Function and certain other senior-level vacancies (namely, Deputy Chief Executive Officer, General Manager of Planning Department, General Manager of Audit Department, General Manager of Risk Management Department, General Manager of Operations and Administration Department, General Manager of Credit Department, Co-General Manager of Credit Department Asset Finance Credit Department, Co-General Manager of Planning Department Legal and Compliance Department, Head of Planning Department Finance and Control Group and Joint General Managers of Credit Department with credit sanctioning responsibilities) as and when they arise. The Committee is also responsible for: (i) considering the composition of the Board, which includes matters of diversity and the Board s policy for the selection and appointment of Directors and senior management; (ii) assessing at least annually the knowledge, skills and experience of the Directors individually and the Board collectively; (iii) assessing annually the size, composition and performance of the Board; and (iv) taking into account the need to ensure that the Board s decision-making is not dominated by any one individual or small group of individuals in a manner that is detrimental to the interest of the Bank as a whole. Page 5 of 8

6 Remuneration and Human Resources Committee The members of the Remuneration and Human Resources Committee are Ms Powers- Freeling (Chairman), Mr Ross and Mr Hosomi. Mr Imaeda, Mr Nakamura and the Head of Human Resources Group also attend Committee meetings as non-voting members. The Remuneration and Human Resources Committee is responsible for assessing the appropriateness, and approving the remuneration, of the Bank s Directors and certain other members of management. It also has responsibility for other Board level remuneration and human resource matters, such as approving the Bank s remuneration policy and considering the level of staff turnover. The Remuneration and Human Resources Committee meets quarterly and reports to the Board of Directors. Risk Committees The Bank has also established five Risk Committees, which are responsible for considering certain areas of risk for the Bank and for SMBC s EMEA Region. These are as follows: Asset and Liability Management Committee This Committee is primarily responsible for considering market and liquidity risk management issues, asset and liability management issues, discussing operations and funding policy (including the long-term funding strategy) and reporting on the Bank s risk appetite and associated risk tolerances, monitoring limits, guidelines and the compliance with regulatory requirements. The Committee has established a sub-committee, Liquidity Management Committee, which considers issues relating to liquidity risk management, including analysis of the funding market, stress testing results, impact of business strategy on assets and deposits and funding strategy. Credit Risk Committee This Committee is primarily responsible for reporting and discussing a range of credit issues including consideration of credit risk Key Risk Indicators, portfolio analysis, sector analysis, asset allocation as well as the Bank s credit risk appetite and associated risk tolerances. It also reviews matters such as credit policies and rules, credit strategy and provisioning policy. Issues arising from the ongoing credit review by Audit Department - Credit Review Group are also discussed at this Committee. Page 6 of 8

7 Financial Crime Committee This Committee is responsible for considering those aspects of the Bank s financial crime arrangements that it deems necessary to ensure that the Bank s KYC Risk Culture Mission is achieved. The Committee is independent of other Committees, but reports to the Executive Committee and Audit, Risk and Compliance Committee on any significant matters that require the attention of those Committees. Operational and General Risk Committee This Committee is responsible for examining and discussing matters related to general risk management issues of the Bank. The subjects discussed include risk issues arising in relation to the overall risk management framework, the risks arising from the implementation of new products and services and the operational risk management framework and elements thereof, such as information systems issues, information security matters, compliance and regulatory matters and Internal Audit findings. This Committee has established two Sub-Committees: (i) IT Steering Committee, which is responsible for considering IT initiatives, policy and projects and systems performance; and (ii) New Products and Services Committee, which is responsible for considering applications for the introduction of new products and services. Prudential Regulatory Committee This Committee is responsible for considering a number of Prudential Risk issues, including examining the governance processes, assumptions and results related to: the Internal Capital Adequacy Assessment Process, Recovery and Resolution planning, Solvent Wind Down Analysis, Internal Liquidity Adequacy Assessment, credit risk management models and non-credit risk related models (such as the Operational Risk model). Nomination matters As set out above, the EMEA Nomination Committee is responsible for nominating candidates to the Board to fill SMBCE Board, Senior Management Function and certain other senior-level vacancies. The final decision on whether to appoint any candidate to one of these positions lies with the Board of Directors. The Board has established a Diversity Policy. This Policy and the Bank s policy on the selection and appointment of senior management and Directors reflect the Bank s status as a wholly-owned subsidiary of SMBC. In respect of gender diversity, the Board has set itself a target that at least 20 per cent of the Board will be made up of women by the end of 2018, while keeping in mind the need to ensure that an Page 7 of 8

8 appropriate mix of skills and experience on the Board. Currently, 12.5 per cent of the Board is made up of women. As a wholly-owned subsidiary of SMBC, the Bank typically receives candidates from SMBC to fill senior management (General Manager and Director) vacancies. In cases where no suitable SMBC or SMBCE internal candidates are available for senior management positions and management determines that it needs to recruit in the local market, SMBCE will typically engage recruitment consultants to identify suitable candidates for appointment. Appointments to Board and senior management level are made on the basis of the competencies, skills, experience and values of the candidates. In addition, appointments to the Board seek to ensure that the Directors possess adequate collective knowledge, skills and experience to understand the Bank s activities and that it reflects an adequately broad range of experiences. Directors are also expected to commit sufficient time to perform their functions and to act with honesty, integrity and independence of mind to effectively assess and challenge the decisions of senior management and to effectively oversee and monitor management decision-making. A bespoke training and induction programme is in place for all new senior management and Board members. The purpose of this programme is to give those individuals the information they need in order for them to become as effective as possible in their new role within the shortest practicable time. 1 February 2017 Page 8 of 8